In-store technology

As the top U.S. executive of Dunnhumby, Matt O’Grady runs a digitally focused organization dedicated to helping grocers thrive in a fast-paced environment where understanding shopper behavior at the most granular level is critical.

But while he studies the grocery business through a technology-based lens, O’Grady strives to view the industry through the eyes of an individual consumer and is wistful for the days when human interaction with store employees defined the shopping experience. That sense that stores need to build customized ties with customers even as they look for ways to maximize sales opportunities is at the heart of how O’Grady approaches the international retail data analysis powerhouse’s role in providing intelligence and guidance to retailers.

“When I grew up you would have known the store manager or you would have known the stock boy or you would have known the checkout person. Those days are long gone, because stores are so enormous and so prevalent and there’s so many shopping patterns, but personalization [technology] is creating that emotional connection with the store” that shoppers continue to look for, said O’Grady, who serves as president of the Americas region for Dunnhumby.

Based in Chicago, O’Grady’s company is known for studies like its Retailer Preference Index, which provides insight into grocers’ value propositions, and Consumer Trends Tracker, which looks at shopper needs, perceptions and behavior over time.

O’Grady, who served in executive roles at 12th Street Measurement and Nielsen before joining Dunnhumby in December 2022, makes a point of visiting stores the company works with to see the company’s recommendations in action.

“I love going to visit a store before I go and speak with the store leaders to see what it's like. I go in with people who work at Dunnhumby and show me, hey, this was our recommendation under category management to offer three for the price of two, and I’m very proud of when we make an actual impact,” O’Grady said.

O’Grady is particularly impressed with how quickly grocers have adopted retail media as a way to connect with shoppers: “I knew retail media was growing when I came here, but to see how fast it’s growing, and how much of it is in-store, is phenomenal. It’s going to be bigger than linear TV within six to 12 months. That was a big surprise for me.”

O’Grady discussed Dunnhumby’s role as a data provider to retailers in a recent interview with Grocery Dive.

This interview has been edited for length and clarity.

GROCERY DIVE: At a basic level, what’s your definition of personalization?

MATT O’GRADY: We did a study and asked consumers what personalization means to them and there were three pillars. The first of them is targeted savings. Everybody wants to save money, and that’s across socio-economic classes. Number two is a frictionless experience. How easy is it to shop there? And number three is localized assortment, to make you feel more part of the community.

How does personalization figure into the way you think about omnichannel grocery shopping?

I would say that personalization is a way to reconnect with the store. That could be an in-store experience or it could be e-commerce as well. It’s a way to really reignite that connection or that love with the store [but] it's not ruling out e-commerce as an option.

What are your thoughts about the connection between personalization and loyalty programs?

Based upon the input or the feedback we get on this and the willingness and how many people are revamping or improving their loyalty or relaunching their loyalty programs, I’m just shocked at how many people are investing. Whether you have multiple banners or one banner, loyalty programs have a lot to do with them understanding that personalization is here to stay and it is the new connection with shoppers.

How do you view the links between retail media and personalization?

If [retailers] don't have a personal relationship with a shopper, they're not going to know what they're buying. They're not going to be able to advertise to them. So that's a side tailwind that's adjacent to personalization. You can’t ignore the retail media factor and the money they're making from that.

Do you think retailers will continue to place a heavy emphasis on value even as inflation falls?

I wouldn't say that everybody's going to [get into] everyday low pricing, because there's other benefits, like more SKUs and more service [that stores can offer], but the obsession with savings, I think, is here to stay.

Targeted savings is the number one thing. We saw from a study we did earlier in [2023] on what inflation actually was compared to what the consumer perception was [that they were] completely divergent. Regardless of socio-economic class, everybody wants to save money. It’s almost like a sport.

How do you think grocers will approach e-commerce fulfillment going forward as the meaning of “omnichannel” evolves?

I think every retailer would love it if it's as localized as possible because that minimizes their carbon footprint, but it’s the efficiency with which they can deliver that is driving a lot of it. You want those e-commerce centers to be as efficient as possible.

Dollar General is continuing its pullback on self-checkout.

The discounter continued to convert thousands of stores away from self-checkout throughout its first quarter of fiscal year 2024, furthering an initiative announced in March to combat shrink, CEO Todd Vasos said during the company’s earnings call in May. 

Throughout the last two quarters, Dollar General has removed or limited self-checkout in 12,000 locations with plans to only offer self-checkout at “a limited number of stores, most of which are higher volume and low shrink locations,” Vasos added. Prior to the changes, more than 14,000 Dollar General stores were equipped with the payment method.

“While this represents a significant change in our stores, we believe this is the right course of action to drive increased customer engagement, while also better positioning us to begin reducing shrink in the back half of ‘24 with a more material positive impact expected in 2025,” Vasos said.

Dollar General announced a three-pronged plan to pull back on self-checkout during its 2023 Q4 earnings. The retailer’s first course of action was to convert some or all self-checkout registers to “assisted checkout” options in around 9,000 stores, which Dollar General completed last quarter. The retailer hasn’t provided details on this checkout model, though Vasos’s references to self-checkout, staffed and assisted checkout modes indicate this is a hybrid model.

Second, Dollar General began limiting self-checkout to transactions of five items or less. Finally, over the first half of 2024, Dollar General said it would remove self-checkout from more than 300 of its highest shrink stores. 

Moving away from self-checkout is a stark difference from the moves the retailer made in 2022 when it piloted locations that only offered self-checkout. 

The revised strategy for self-checkout is due to the fact that shrink is Dollar General’s “most significant headwind,” Vasos said. Front-end adjustments are not the only place the retailer is tackling ongoing shrink problems. Vasos noted that Dollar General is also analyzing its supply chain merchandising as well as removing high-shrink SKUs.

Sponsored content

By NCR Voyix

In the realm of modern grocery retail, data has emerged as the lifeblood propelling transformation. Retailers are investing significantly in data analytics, leveraging insights to tailor marketing, personalize experiences, and optimize supply chains. The key lies in consumer trust, and grocers are at the forefront of harnessing vast amounts of personal data to refine strategies. 
 
The study, "The Consumer Data Give and Take," delves into the trustworthiness of grocers as data custodians, highlighting consumer beliefs and willingness to share various data types. The insights are crucial, considering the increasing reliance on data in the grocery industry. 

Consumer trust in grocers

European consumers, as per the report, overwhelmingly perceive grocers as trustworthy data guardians. The survey explores attitudes toward sharing 18 different data types, ranging from financial information to social media profiles. Interestingly, consumers express a higher willingness to share data that enhances personalized offerings, specials, and promotions. 

Willingness to share data

Consumers, particularly younger ones with higher e-commerce experience, are more open to sharing data. The survey reveals varying degrees of willingness across age groups, emphasizing that consumers are more agreeable when they understand the benefits. 

Potential opportunities and challenges

Survey results indicate openness to sharing even highly personal information, such as DNA and financial data, under the right circumstances. This opens avenues for innovative strategies, including using financial data for segmentation models and offering health services based on DNA information. 

Earning consumer trust: A 4-step framework

Building and maintaining consumer trust is paramount, especially when dealing with non-traditional data requests. 
 

1. Lean into transparency
   • Grocers must demonstrate competency, sincerity, and openness in data stewardship. 
   • Transparency regarding data collection, granularity, and third-party sharing is crucial. 
   • Policies similar to Apple's new privacy policy serve as a model for clear, customer-centric transparency. 
2. Empower consumers 
   • Offer tools for consumers to access, visualize, and modify their data. 
   • Provide options for opting in and out of data collection, fostering a sense of control. 
   • Encourage data sharing by articulating clear benefits and value-added services. 
3. Deliver new benefits
   • Innovators and early adopters play a crucial role in sparking mass adoption of new technologies. 
   • Pilot trials should focus on demonstrating customer acceptance and value. 
   • Showcase how data sharing enhances customer experiences and benefits consumers. 
4. Allow consumers to lead
   • After successful pilots, encourage mass-market consumers to adopt new behaviors. 
   • Use simplified customer journeys to demonstrate benefits and ease of participation. 
   • Enhance disclosure statements and data management tools to maintain trust. 

The future of data sharing

Consumer willingness to share non-traditional personal data is in its early stages. Grocers, by understanding their customers and implementing transparent policies, have the potential to unlock new opportunities. Biometrics, social data, and health information could pave the way for seamless, personalized experiences and innovative revenue streams. 
 
As the grocery industry enters the era of data-driven experiences, establishing trust and delivering tangible benefits are the keys to unlocking the full potential of consumer data. Grocers are urged to embark on well-timed initiatives, demonstrating their commitment to earning and maintaining consumer trust as stewards of expanded data types. 

As Instacart works to bring its technology to more grocery stores, the company is looking to smart carts to help lead the way.

The company, which continues to depend heavily on its legacy e-commerce business to drive revenue, expects to have “thousands” of its screen-equipped carts, called Caper Carts, in supermarkets by the end of 2024 and “could scale to many more,” CEO Fidji Simo said during the company’s first-quarter earnings call in May.

“Retail is really excited about Caper Carts because it becomes a completely new incremental line of business for them,” Simo said.

The carts’ ability to display targeted advertising to shoppers is a central reason why Instacart is so bullish about its potential to help drive growth, Simo said, noting that the company is continuing to work with grocers including Kroger, Wakefern Food Corp. and Schnuck Markets to test the equipment.

Instacart entered the smart cart business in 2021 when it acquired Caper Carts for $350 million. The company offers the carts to grocers through its Connected Stores initiative.

The Caper Carts will soon have the capability to display real-time offers to shoppers based on where they are in the store, items they have already selected and what the equipment knows about their preferences, Simo wrote in a letter to shareholders that accompanied the company’s latest quarterly results.

Simo noted in the letter that shoppers spend 30 minutes on average with the carts and are sometimes “seeking out stores with our carts even if they’ve never shopped there before.”

Data from Schnucks shows that the carts have handled more than 10% of sales on busy days at a store where only 10 Caper Carts were deployed along with around 160 traditional carts.

Schnucks shoppers who use smart carts tend to buy more items than people who don’t use the carts, Simo said during the call. 

“We have been really obsessed over the consumer reaction, very encouraged by it, and that’s why you are seeing us really pour more fuel on Caper and seeing retailers very excited to deploy [the carts],” Simo said.

Artificial intelligence has taken the grocery industry by storm in recent years, with generative AI emerging as the newest trend looking to help food retailers streamline operations, reduce labor and increase profits. 

Yet grocers are increasingly saying that digital tools serve as just that — tools instead of be-all, end-all solutions. At the National Retail Federation’s annual conference in New York City this year, they emphasized the importance of understanding how technology intersects with customer and employee needs. 

Several grocers, including Schnuck Markets and Giant Eagle, spoke at the conference about the importance of balancing the benefits of technology with the impacts it can have on labor, from getting workers comfortable with new technology to making sure they feel a sense of purpose with their work. 

“I see a lot of technology [at NRF], but it all goes back to: ‘What is the human connection that this technology is in service of?’... Technology by itself is kind of meaningless to us,” said Shipt Vice President of Sales Development and Innovation Jon Fahrner.

Putting workers first

While technology can be more efficient than human workers, Wegmans sees value in the “human touch” that workers provide, said Smita Katakwar, the grocer’s senior vice president of technology. As the popular grocery chain evaluates technology, it’s seeking out solutions that handle the laborious and boring tasks for its workers. 

“We go after purposeful automation where we are freeing up other people's capacity to do more meaningful work and any redundant and tactical [tasks]… we are delegating to machines, because what our people excel at is relationship building, creativity, connecting dots,” said Katakwar.

Examples of that include data entry and in-store temperature tests, Katakwar said, noting that Wegmans’ development of a solution to handle temperature checks that were once done manually has freed up associates to use the time to learn more about products and then better engage with customers’ queries.

“Our job is to make technology invisible and let the human shine whenever there is a customer interaction,” Katakwar said.

Midwestern chain Schnuck Markets has created a feedback loop that allows its executives to learn from the grocer’s frontline workers. 

The corporate office has paid close attention to how workers use piloted solutions and if the technologies it tests are “actually achieving what we think theoretically they should achieve,” Schnucks Chief Data Officer and Deputy CIO Tom Henry said. 

Solutions that have worked successfully include offering Flexforce, a flexible labor option that allows workers to choose part-time shifts at store locations while receiving the same benefits as traditional Schnucks employees, and using software company Logile to prioritize and communicate specific, key job responsibilities for the workers clocking in, Schnucks executives on the panel said. 

“If you have a happy employee base, that’s going to create a happy and loyal customer base,” Henry said.

Driving digital adoption

While grocers’ corporate offices can identify promising technology, communicating the value of the solutions and encouraging adoption among workers can be a challenge. 

When Giant Eagle started working with Axonify to revamp its onboarding process and worker communication platforms to boost its retention rate, the grocery chain didn’t want the partnership to seem like an HR initiative, but rather a business tool, said Janis Leigh, executive vice president and chief people officer at Giant Eagle. 

With a workforce of 3,600 people, Giant Eagle’s human resources team decided to phase in Axonify’s solution, which was branded in-house as “Thrive” and serves as an onboarding, training and internal communications platform, by first piloting it with the GetGo convenience and fuel locations due to the smaller team sizes, Leigh said. 

To incentivize user adoption, Giant Eagle tied strong participation rates to leaders’ quarterly bonuses, Leigh said. Meanwhile, workers using Thrive can earn points for completing trainings or taking quizzes, which they can then use to enter raffles for prizes like tickets to local sporting events. 

Giant Eagle then used its findings, including data around user engagement, from the pilot to launch Thrive in other parts of its business, like its supermarkets and pharmacies, Leigh said. 

Retention, which had hovered at around 30% to 40% before the Axonify partnership, has shot up to an average of 60%, with some stores seeing 80% retention, Leigh said. With the trainings available on Thrive, team members can receive cross-department instruction to more easily move around the store, Leigh said, adding that the company has identified top performers to serve as department “experts” for peer-to-peer training. 

Save A Lot has faced pushback from some workers with technology rollouts. After the discounter started working with technology partner Movista, which helps grocers with on-shelf compliance, Save A Lot found that some surveyed workers gave Movista negative reviews, said Mark Kotcher, the discounter’s senior vice president of field sales and marketing.

Kotcher said that those reviews “didn’t deter” Save A Lot from continuing to work with Movista: “I talked to my retail directors and managers .. and they shut me down right away. They're like, ‘No, no, no. And they have a problem with this is because [the solution is] holding them accountable.’”

Bridging divides between customers and retailers

Grocers and companies at NRF spoke to the importance associates play in helping retailers form relationships with their customers to drive increased loyalty and bigger baskets.  

Target-owned e-commerce provider Shipt has found that when its personal shoppers have notified a customer about a favorite or previously purchased item, like a baby shampoo, spotted at the store they’re shopping, the customer often adds that item to their order, Fahrner said.

Shipt’s “Cool Finds” program aims to further elevate that personalization by allowing personal shoppers to provide recommendations to customers, giving them a “window” into in-store shopping that could spark add-ons for things like seasonal or limited edition items, Fahrner said.

“We think the human part is our differentiator,” Fahrner said.

Schnucks also sees value in having workers interact with customers. While working at a Schnucks store over the Christmas holiday, Henry spotted a cashier named Ruby building and maintaining relationships with customers: “Every person who comes through that line knows her, knows her children. She knows their kids. There’s just a really interesting relationship that Ruby has with the community.”

For instances where grocers have turned to technology to handle tasks, humanizing the digital solutions has helped make them more acceptable to customers. Ahold Delhaize banner Stop & Shop has done just that with its mobile autonomous shelf scanner, known as Marty The Robot, with the addition of googly eyes and a smile. 

The idea to humanize the robot came from a worker at a Giant store in Harrisburg, Pennsylvania, to turn what would normally be an austere robotic solution into a friendly and approachable aisle-roaming robot. 

Initially focused on monitoring for floor hazards and spotting out-of-stocks, Marty now also serves as a brand ambassador of sorts for the Northeastern grocery chain, Karen Mitchell, Stop & Shop’s chief marketing officer and senior vice president, told Omni Talk during NRF. 

If recent news reports are to be believed, self-checkout terminals are a failed experiment, and retailers all over the world are beginning to pull them out of their stores.

Are we witnessing the beginning of the end for a technology that grocers have come to rely on over the past few years?

To paraphrase Mark Twain, the news reports of self-checkout’s death have been greatly exaggerated.

Self-checkout machines aren’t going anywhere. In fact, judging from conversations I’ve had with industry experts in recent weeks, as well as from our reporting and observations at recent trade shows, retailers’ reliance on the technology is actually growing.

Reports have pointed to recent small-scale shifts at Walmart and Target and to U.K. retailer Booths’ recent decision to boot self-checkout machines from its stores. But plenty of other retailers have lately increased their reliance on the devices. Amazon Fresh stores are adding the checkout kiosks into their refreshed locations, while Wegmans’ newly opened Manhattan supermarket has a supersized self-checkout section with about three dozen of the machines — which is pretty impressive, given the short leash Wegmans tends to give checkout tech.

The same trend applies if you look abroad. The Turkish chain Migros has had self-checkout kiosks in its stores for more than 15 years and doesn’t plan on scaling back, Mustafa Bartin, CEO of Migros Retail Turkey, told me in a recent message. Sebastian Rennack, an analyst with Aletos Advisory in Germany, visited retailers in more than 12 European countries in the past year and said he saw an increased investment in self-checkout, not a pullback.

The fact that self-checkouts are thriving amid a public backlash speaks to the operational upsides they offer for retailers, namely labor efficiency and cost savings. Despite many consumers’ complaints about their desire to check out with an actual human worker, retailers have struggled to find those humans to work their front ends. 

Self-checkout machines also help retailers process more shoppers without having to pay more people to do that work. At a time when retailers are looking to cut costs wherever they can and get the most out of their employees in a low-margin business, that’s an enticing proposition.

Self-service is sweeping across other industries. Walk into just about any McDonald’s these days and you’ll be greeted by a digital kiosk that handles ordering and payment. Convenience stores are also rapidly adding self-checkout kiosks right now because they’re struggling to find people to work inside their stores, Toby Awalt, vice president of marketing with self-checkout technology firm Mashgin, told me.

That all said, self-checkout is an evolving technology that has legitimate flaws. In many stores, the only thing stopping people from swiping items without scanning is a single employee who’s trying to watch over numerous terminals and may not even have a clear view of them. Buying age-restricted items or produce at self-checkout feels as tedious as going through security at the airport. And don’t even get me started on what it’s like when those product scales malfunction.

Self-checkout is an imperfect technology that got rolled out to shoppers quickly in order to paper over retailers’ operational challenges. While many other retail technologies get improved upon through closed-door testing and careful scaling, self-checkout is going through these growing pains in front of hundreds of millions of consumers.

Grocers need to recognize the limitations of self-checkout and do as much as they can to offset them. They also need to stay on top of the latest innovations that can help improve the user experience and cut down on shrink.

To that end, here are a few thoughts on the best practices retailers are implementing — and should implement — as they wrestle with this technology.

Shrink is a problem, but it’s not a deal breaker

One of the biggest hazards of self-checkout for retailers is the potential for people to make off with goods they didn’t pay for — either wittingly or unwittingly. News reports and recent social media posts have noted retailers shifting their self-checkout strategy significantly because of this.

But shrink isn’t a deal breaker for most companies, said Stewart Samuel, director of retail futures with IGD.

“I think retailers have accepted that there’s going to be some shrink, but that it’s going to be outweighed by the cost savings they have,” he told me.

Still, grocers aren’t content with elevated product loss at their stores. Samuel said technology like advanced cameras and artificial intelligence is helping reduce shrink. Bartin, meanwhile, said Migros plans to increase its investment in security measures for its self-checkout areas.

Retailers need to stay on top of self-checkout innovations

Bad user experiences and elevated shrink are the biggest pain points for self-checkout — something retailers and technology companies are all too aware of.

Promising updates are starting to roll out across the industry. Kroger stores use an AI-fueled system from Everseen to detect when a shopper has failed to scan an item. The system gives shoppers a friendly reminder to start, then alerts a store employee if the action isn’t taken.

At a Wegmans’ store in New York, my colleague Catherine Douglas Moran noticed video monitors affixed to the kiosks that show shoppers while they’re checking out — a subtle reminder that people are being watched, whether they like it or not.

While well-intentioned hints might help prevent theft at self-checkout terminals, it’s important to ensure that messaging aimed at ensuring people handle their items properly doesn’t put them off. A harsh voice commanding a shopper to “place your item in the bagging area!” might prompt them to do as the machine wants, but could also dissuade them from using self-checkout the next time they make a purchase at the same retailer.

Innovation is also making incremental improvements to the chore of scanning and bagging your own groceries. Retailers are probing technology that can recognize produce, keeping shoppers from having to punch in those annoying PLU codes. Self-checkout suppliers are also using AI  to estimate peoples’ age when buying age-restricted items — an opt-in task that could prove to be a double-edged sword. Do I want to know how old a checkout machine thinks I am?

Design innovation is another frontier retailers should investigate. Lowes Foods stores has adopted a front-end system that allows shoppers to choose self-checkout or manned checkout after they’ve waited in a single line. Samuel said he’s seen retailers with self-checkout systems that funnel users based on cart size, while other retailers have U-shaped self-checkout areas that allow workers to more easily monitor and assist customers.

Don’t force people to use self-checkout

A few retailers have tested stores that do away with manned registers and only offer self-checkout machines. But the vast majority of retailers offer both options.

So in theory, if you’re one of the people vehemently opposed to self-checkout, you don’t have to do it. Problem solved.

Well, not really. Many retailers view self-checkout as a strategy to manage overflow rather than a way to offer choice. During busy periods when manned registers have long lines, people may feel like they have no other choice but to use the self-checkout machine they dislike. Force a shopper to do this again and again, and you may lose that customer.

The optics of staffing at the front end are also important. It’s one thing if a grocer has most or all of their registers staffed and are still experiencing long lines. It’s quite another if only one or two lanes are open. In that case, self-checkout feels like something retailers are strong-arming people to do.

Staff self-checkout areas accordingly

Technology promises to help curb theft at self-checkout, but the best and most immediate step retailers can take to reduce shrink is by posting store employees in the area.

Most retailers seem to understand this, though they may be missing some of the finer points. I’ve been in numerous stores where self-checkout was overseen by one preoccupied worker who was poorly placed to monitor the section. At other stores, cashiers are expected to pull double duty as both a checkstand operator and self-checkout minder — a position that erodes both experiences.

Grocers need to place engaged employees at strategic points in self-checkout. If they get bored, rotate the position. Samuel said he usually sees a 6-to-1 ratio of checkout terminals to workers. Go any higher than that and you risk having too many shoppers for workers to monitor and respond promptly to issues. 

Retailers are taking an express lane approach

It’s a lot of work to process a full cart of products through a self-checkout lane. Most of these kiosks just aren’t built for that task.

The better use is for small basket shopping. To that end, Target recently began testing a policy that limits the number of items that people can swipe at self-checkout stations. News reports have pointed to this as evidence of a pullback in self-checkout, but I actually think it’s a smart move that shows retailers are refining their approach.

Pushy shoppers with more than 10 or 15 items can still edge their way into the area, especially during peak times. But hasn’t that always been the case with grocery express lanes?

Recognize that this technology is imperfect

Although the backlash against self-checkout isn’t putting much of a dent in retailers’ plans for the technology, companies should still be sensitive to peoples’ concerns.  

Deploy clear signage that softens self-checkout’s image and helps shoppers through the process. Post well-trained employees in the area and install machines that won’t break down on a dime. 

Also recognize that self-checkout will very likely get disrupted at some point in the coming years. Frictionless checkout and smart carts have proven too costly and imperfect so far for retailers to scale — but that may not always be the case. Consumers and technology are evolving at a rapid pace. 

It wasn’t so long ago, in fact, that self-checkout was written off by the industry. Invented in the 80s, the technology struggled for years to make a compelling case to retailers to get rolled out at scale. A few key updates and a pandemic later, and now the machines are seemingly everywhere, for better or for worse

While scan-and-go technology has had a rocky relationship with grocers, it’s proving to be a hit at Sam’s Club’s membership stores. The club retailer found that 1 in 3 of its members use the capability on a regular basis, according to a company blog post in February. 

Over the past three years, the club retailer has seen a 50% uptick in Scan & Go adoption as it continues to improve the digital tool’s capabilities. 

Sam’s Club is also rolling out new receipt verification technology that will be available chain-wide by the end of 2024.

Scan-and-go has been a tricky subject for grocers as industry experts boast about the technology’s convenience, but worry about the risk of shrink. When Wegmans ended its use of its scan-and-go shopping app due to losses in September 2022, the grocer’s customers took to social media to express their disappointment. 

It appears the technology is better suited to a shopping experience where customers select fewer, larger items. Sam’s Club is leaning into scan-and-go after its usage “reached record highs last year,” according to the blog post. 

Available to shoppers through the club’s mobile app, Sam’s Club customers are able to select items, complete payment and skip the checkout line. In recent years, the club retailer has taken customer feedback to improve the app and has incorporated upgrades like EBT SNAP acceptance, multi-transaction capabilities, the ability to order fuel or cafe items and personalized suggestions. 

As Sam’s Club continues to find ways to improve the wait at checkout lines as well as at the stores’ exits, the club retailer is also rolling out its new receipt verification technology after a successful 10-location pilot. 

The “exit technology” uses computer vision, images of shopping cart images captured by cameras and AI to verify receipts and payments. The new technology eliminates a Sam’s Club staff member having to check shoppers’ receipts as they leave the store. The club retailer expects to implement the exit technology chainwide by the end of 2024.

For Schnuck Markets’ corporate team, the decision to bring electronic shelf labels into stores stemmed from firsthand experience.

The grocer’s corporate technology staff routinely spends time working as store associates in stores in order to understand the company’s day-to-day needs. During one recent exercise, they realized how arduous the process of hanging shelf labels throughout stores turned out to be.

“We realized how much it sucked,” Dave Steck, vice president of IT infrastructure and application development at Schnuck Markets, recounted to grocery industry attendees at a Groceryshop session in September 2022.

Now, the Midwestern grocery chain is intent on expanding electronic shelf labels (ESLs) across all of its stores as not just a way to free up associates for other tasks, but also to boost operational efficiencies and tap into new retail media offerings.

Schnucks is not alone in the endeavor. Several other grocers have also turned to ESLs for pilots or fleet-wide deployments, including Kroger, Hy-Vee and Chicago startup Dom's Kitchen & Market. Ahold Delhaize USA is piloting ESLs at undisclosed locations with hopes of scaling the technology.

With the price tags for electronic shelf labels dropping in recent years and labor costs simultaneously rising, grocery industry sources said they expect to see the technology scale quickly. At the same time, vendors said they are working to overcome battery life constraints and network connectivity issues with new device models, making the technology more reliable and consistent.

ESLs can give retailers a better view of pricing data, inventory and out-of-stocks, said Anne Mezzenga, a Target veteran and co-CEO of retail blog Omni Talk, and could ultimately help inform retailers’ retail media efforts.

“They tackle the big issue of changing prices and the loss that grocery retailers can experience when they don’t have accurate pricing on shelf,” Mezzenga said.

Boosting store operations and labor efficiencies

At Schnucks’ stores without electronic shelf labels, workers replace thousands of tags each week. “It’s a lot of labor to do very little,” Steck said at Groceryshop.

Schnucks, which currently has ESLs installed at a handful of stores, is working toward a chainwide deployment of Hanshow’s digital tags within two years. The company sees a roadmap of possibilities for what the tags can unlock, Steck and Bob Hardester, the grocer’s senior vice president, chief information officer and chief supply chain officer, said in a joint interview.

“The store teams [with ESLs] absolutely love it,” Steck told Grocery Dive.

Hanshow and SES-imagotag are the two ESL providers linked with Instacart’s Carrot Tag software, which has pick-to-light capabilities for Instacart workers.

ESLs can make stocking and e-commerce fulfillment faster and more efficient. Tags with LED lights on them can flash for pick-to-light and stock-to-light functionalities, helping people locate products more quickly, sources said. Solum’s Newton tag, for example, has seven LED lights, which workers could use to fulfill seven orders by assigning a different color to each one, said James (Hyunseok) Jeong, a business manager with Solum.

In addition, Solum’s Newton tag lets shoppers use their smartphones to communicate with the ESL, allowing them to more easily access and download digital deals in-store, said Jeong.

Instacart’s Carrot Tags also use lights to help people find products and display key product information, such as whether an item is gluten-free, organic, kosher or EBT SNAP-eligible. 

For products with multiple facings, using the flashing LEDs coupled with inventory management insights can make it faster for store workers or shoppers to find or put away items, Hardester said. In three stores, Schnucks has reserved two of the seven ESL’s LED colors for pick-to-light functionality for Instacart workers to pick online orders, he said.

For out-of-stocks, “you could give them a QR code to scan [on the tag] if they'd like to know when the product is back at the store,” Hardester said. Schnucks has already connected its ESLs to its shelf-scanning Simbe robots, which are deployed fleet-wide. 

“If an item is out on the shelf and we know that that item is not in the store, we should flip [the tag to say] it to ‘temporarily out’ and that drives down customer questions, because even though they see an empty shelf, if it’s a traditional paper tag, the customer is still going to ask the teammate, ‘Well do you have this in the backroom?’” Steck said. 

ESL makers Solum and Pricer both note that their tags can have different “pages” for a single product. For example, the tags could display stocking levels in the early morning hours when workers are stocking levels, then switch to consumer-facing pricing and other information during operating hours. 

Good Food Holdings, which runs grocery stores along the West Coast under banners including Metropolitan Market, Bristol Farms, Lazy Acres, New Seasons Market, also sees benefits in using ESLs to guide people to products in its stores, said CEO Neil Stern. 

The retailer has added ESLs from SES-imagotag equipped with Carrot Tag capabilities to some shelves in a Bristol Farms store in Irvine, California, as part of Instacart’s Connected Stores program, Stern said. Good Food Holdings also have ESLs from SES-imagotag at a Metropolitan Market location in Seattle, he added.

While the labor savings offered by ESLs were noteworthy, Stern said those benefits alone weren’t strong enough to convince him to move ahead with the technology. But now that ESLs have evolved to the point that they can operate in combination with other pricing tools, serve as beacons for consumers and Instacart shoppers, and help with out-of-stock monitoring they are considerably more compelling, he said.

“You can envision a future where if I'm a shopper and I want gluten-free products, for example, I can have the shelf tags light up and just show me gluten-free. That's an advanced capability,” Stern said.

For dark store operations, ESLs can help provide insight into where products are located and what their stock levels are, said Robert Willcox, a vice president with digital shelf tag company Pricer and a former Whole Foods Market IT executive. 

ESLs also can tie into sustainability efforts by eliminating the need to print out tags and shelf talkers, Mezzenga said. To cut down on food waste, Schnucks is using ESLs for markdowns for products nearing their expiration date, Hardester said.

Unlocking new merchandising and marketing options

Neil Saunders, managing director of GlobalData Retail, said a key advantage of ESLs is that they can help retailers assure digitally savvy consumers that the prices displayed on their shelves are always up to date.

“What [can be] really frustrating for consumers is that the price that you're paying at the register is not the same as what the shelf label says because they've not got round to updating that shelf label, and it happens a lot,” Saunders said. “So obviously the electronic shelf-edge labels would give people the right price, which I think is a real advantage.”

Grocers are particularly susceptible to the possibility that a price on paper shelf tag might be out of date because they have so many SKUs, Saunders said. The risk of putting off a customer is heightened by the fact that people often buy so many products on a trip to the supermarket that they are unlikely to be able to recall the cost of every item when reaching the checkout counter.

The Schnucks executives said ESLs make it easier to have daypart pricing, such as offering specials during rush hour. “You don't have to follow your traditional ad cycles,” Hardester said, noting Friday Specials and daily happy hour deals become more feasible.

Schnucks is also planning to link ESLs with smart carts in the future for in-store navigation with the LEDs, Hardester said. 

“Your thinking has to go well beyond replacing a paper tag with an electronic tag. Your thinking has to go: How do I build this into my overall digital ecosystem and make this powerful for my customers, my CPGs, my merchants, my operators, my marketing?” Hardester said. 

ESLs are no longer just boring black-and-white digital screens. Some vendors’ efforts to expand the number of on-screen colors on their tags can provide even more aesthetic opportunities for grocers to use for marketing. 

Vendors with booths at the National Retail Federation’s conference in New York in January showed off tags in a variety of sizes. For example, a retailer may opt for a larger tag on an end-cap to make it more prominent or style information about deals in black text against a red stripe. 

Taking promotional opportunities a step further, grocers can tie cameras and sensors to ESLs to gather insight into real-time purchasing decisions at the physical shelf and then use that data under a retail media business to give CPGs a better understanding of offline shopping behavior, Mezzenga said. 

“If you’re a retailer and you aren’t looking at them yet, you should be,” Steck said about ESLs at Groceryshop. 

Aldi has installed its first fully automated checkout system in the U.S. in partnership with technology firm Grabango at a store in suburban Chicago, allowing shoppers to leave without scanning their items.

The checkout equipment uses computer vision-based cameras and sensors mounted on the ceiling to monitor shoppers as they walk through the store and records the items they select.

Aldi began offering the automated checkout service at the grocery store, located at 2275 Galena Blvd. in Aurora, Illinois, in November, said a Grabango representative who was working in the store when a reporter from sister publication Payments Dive visited in February. The location is about 10 miles from Batavia, Illinois, where Aldi’s U.S. headquarters is located.

The store, which opened in 2017 according to a local media report, is decked out with signage inviting customers to try the system, which the retailer calls “Aldi Go.” The signs, which appear inside and outside the store, indicate that the system is “Powered by Grabango.”

To use the service, shoppers need to install a mobile app from Grabango and select a credit card to cover the cost of their purchases. All major credit cards are accepted. Apple Pay is also an option and the company is working on offering Google Pay as well, the Grabango representative said. 

The app includes a button to allow shoppers to get clearance from a store employee to buy age-restricted items like alcohol and also requires them to weigh some produce items.

Customers who opt to use the Aldi Go system bypass the store’s traditional checkout counters and stop instead at a touch screen-equipped kiosk to close out their transactions with the swipe of a smartphone. Aldi was offering shoppers $5 off their first order of at least $20 to encourage them to try the technology when Payments Dive visited the store.

Neither Aldi nor Grabango responded by press time to a request for comment about their partnership.

The Aldi Go concept is similar to the Just Walk Out service Amazon offers at certain Amazon Fresh and Whole Foods Market locations. But unlike Amazon, which began offering Just Walk Out at full-sized grocery stores in 2021, Grabango had until the collaboration with Aldi limited its equipment to convenience stores, at least publicly.

In 2022, German retailer Aldi Nord — the counterpart to Aldi Sud, which owns Aldi US — opened a 4,300-square-foot store in the Netherlands featuring frictionless checkout technology supplied by Israeli tech firm Trigo.

Grabango, meanwhile, commercially deployed its equipment for the first time in 2020, when Giant Eagle piloted the system at a GetGo Cafe+Market convenience store in Pittsburgh. Giant Eagle later brought the system to four more convenience stores. Grabango has also forged partnerships in the past with c-store chains MAPCO and Chevron.

However, frictionless checkout technology has struggled so far to expand in grocery and convenience retail in the U.S. Most grocers, including Aldi, have installed self-checkout machines, and some have piloted smart cart technology. In a sign of the challenges Grabango faces in rolling out its technology to retailers, the company laid off an unspecified number of employees last year.

Aldi operates more than 2,300 stores in the U.S.